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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good






2. AVC = TVC/Q






3. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






4. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






5. TR = P * Qd






6. Ed = 1






7. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.






8. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






9. The lost net benefit to society caused by a movement away from the competitive market equilibrium






10. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






11. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials






12. A firm that has market power in the factor market (a wage-setter)






13. Occurs when LRAC is constant over a variety of plant sizes






14. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






15. Ed = 8 - infinite change in demand to price change






16. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good






17. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






18. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






19. Ed = (%dQd)/(%dP). Ignore negative sign






20. Es = (%dQs) / (%dPrice)






21. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit






22. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






23. The imbalance between limited productive resources and unlimited human wants






24. Ed > 1 - meaning consumers are price sensitive






25. The price of a good measured in units of currency






26. Two goods are consumer substitutes if they provide essentially the same utility to consumers






27. The additional benefit received from the consumption of the next unit of a good or service






28. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus






29. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good






30. Models where firms agree to mutually improve their situation






31. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






32. AFC = TFC/Q






33. Entry of new firms shifts the cost curves for all firms upward






34. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






35. Demand for a resource like labor is derived from the demand for the goods produced by the resource






36. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






37. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.






38. When firms focus their resources on production of goods for which they have comparative advantage






39. The difference between total revenue and total explicit and implicit costs






40. ATC = TC/Q = AFC + AVC






41. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.






42. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good






43. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






44. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






45. The total quantity - or total output of a good produced at each quantity of labor employed






46. The sum of consumer surplus and producer surplus






47. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






48. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits






49. Costs that change with the level of output. If output is zero - so are TVCs.






50. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry







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